GameStop Short Squeeze Architect Keith Gill Interview: I Support Retail Investors, I Support Their Voice
Original Author: Julia-Ambra Verlaine / Gunjan Banerji, The Wall Street
Original Title: "Keith Gill Drove the GameStop Reddit Mania. He Talked to the Journal."
Translation: Initium Media
Editor's Note: Yesterday, trader Roaring Kitty (Keith Gill) returned to Twitter after three years and posted several dynamic tweets. Influenced by the news, related US stocks and meme coins saw significant gains. Meme tokens related to GME, Roaring Kitty, and others on Ethereum and Solana surged by tens of times in a day. The stock price of the US game retailer GameStop surged by 74%, causing heavy losses for short sellers of the stock. The Wall Street Journal had previously interviewed Keith Gill in 2021, and BlockBeats has compiled the interview as follows:
GameStop Short Squeeze Instigator Keith Gill interviewed by The Wall Street Journal stated, in his first-ever interview, "I support these retail investors and support their right to speak out."
This article was first published on 2021-02-04
He led an army of fans on the internet to drive GameStop's stock price to an unimaginable surge, attracting worldwide attention to this game retailer overnight, and causing many retail investors to experience the aggregation and dispersal of wealth. Yet, he says he is just an ordinary person.
"I didn't expect it to be like this," said 34-year-old Keith Gill. Known to fans by the alias "DeepF—ingValue" on the Reddit stock forum WallStreetBets, he is also known as "Papa" to his two-year-old daughter. Regarding the situation that has drawn attention from Congress, the Federal Reserve, hedge funds, the media, trading platforms, and hundreds of thousands of investors, he says this was not what he wished for.
Last week, after a rollercoaster new investment game unfolded, Keith gave an interview to The Wall Street Journal. In his first-ever interview, he said, "I'm insignificant in this whole thing," and "I support these retail investors, I support their power to speak up."
Not long ago, Keith was just an ordinary marketing employee at Massachusetts Mutual Life Insurance Co., but to many, he was the driver behind the GameStop stock frenzy. As of last Friday, GameStop's stock price had surged over 1600% since the beginning of the year. In just one day last Wednesday, GameStop's stock price skyrocketed by 135%, hitting a record high of $347.51 per share. By Thursday, the stock had plummeted to $194 per share, only to sharply rebound later in the week. Keep in mind that GameStop's stock was trading around $18 at the beginning of the year.
Many online investors have said that it was Keith's call that united them into a powerful force, a force that not only caused significant losses to well-known hedge funds but also briefly turned Wall Street upside down.
Last Wednesday, Keith posted a screenshot of his personal brokerage account online, showing that he had made around $20 million in investment gains in GameStop stock and options the day before. A Reddit user named "reality_czech" commented, "Your conviction not only inspired many of us to buy this stock and hold but created a true example that has fundamentally changed the lives of thousands of ordinary people. We sincerely thank you. Every penny you earned is well deserved."
The next day, Keith posted another screenshot showing that he had lost $15 million on his GameStop investment. As witnessed by a Wall Street Journal reporter, his E*Trade brokerage account balance totaled around $33 million after Thursday's close, including GameStop stock, options, and millions in cash.
"He's always liked money," said Keith's mother, Elaine Gill. "He would pick up those scratched lottery tickets that many people don't think are winners and just throw them around carelessly...but many times those tickets actually turn out to be winners."
Keith has more than one online alias; on YouTube, he goes by "Roaring Kitty." His online persona has attracted thousands of fans and imitators who have been sharing screenshots of their brokerage accounts. According to the internet data information company Apptopia Inc., as the frenzy around GameStop's stock reached its peak last week, hundreds of thousands of new retail investors downloaded brokerage apps like Robinhood to join the movement.
Kitty stated that she was not a mere retail trader inciting against institutional investors, but simply believed that ordinary investors could uncover investment value in those overlooked stocks. She never imagined she would have so many fans debating her true identity, nor did she anticipate adding tens of millions of dollars to her stock account. She said she was just an ordinary dad living in the suburbs of Boston, with his own hobbies online and a plastic slide on the lawn of his home.
January 30, 2021, GameStop store in Manhattan, New York, USA
Kitty recalled that he started investing in GameStop in June 2019, when the stock price was still hovering around $5. In early of that year, GameStop began looking for its fifth CEO, just 12 months after the previous CEO took office. Kitty kept buying this stock. Although he had played almost no video games other than "Super Mario" and "Donkey Kong," he believed that this struggling game retailer could make a comeback by attracting a new generation of gamers.
Kitty said, "People hastily assumed that GameStop would become the next Blockbuster." Blockbuster was a chain video rental company that declined along with the traditional retail industry. "It seems that many people did not deeply explore the value of this stock but rather misclassified its investment opportunity."
Last summer, Kitty, with long shoulder-length hair, started a personal channel on YouTube because he was afraid of waking up his daughter after she fell asleep. He moved his work to the basement of his rented house in Wilmington, Massachusetts. In his live streams, he praised GameStop and Belgian beer, with Delirium Tremens from Belgium being his favorite.
In a recent YouTube live stream, sporting a red headband and pilot sunglasses, he answered various stock-related questions from viewers. During the over seven-hour stream, he poured himself some prosecco, then switched to beer, celebrating his big win, cheering loudly for his large audience and investors. The video stream garnered over 200,000 views.
Kitty's username on the WallStreetBets forum on Reddit was vulgar, but it reflected his belief in value investing — investing in stocks of companies that are relatively undervalued compared to their fundamentals.
Among Keith's many fans, 34-year-old training manager Jon Hagedorn from Ronkonkoma, New York, said, "Keith is destined to become the greatest legend in WallStreetBets forum history." He also said, "He is the original OG."
The continuous surge in GameStop's stock price seems to have completely detached from the traditional measure of company value, leading to complaints in the market that this coordinated action by retail investors to drive up the share price is equivalent to price manipulation.
The U.S. Securities and Exchange Commission (SEC) announced last Friday that "if the facts demonstrate that trading activity is being manipulated or abused, the Commission will take action to protect the interests of retail investors." Keith said the SEC has not contacted him yet.
Long-Distance Runner and Value Investor
Keith's mother recalled, "When this frenzy just started, my first question to him was whether doing this would be dishonest or illegal? He told me, 'No, Mom, it's not.'" Keith's mom and his dad, Steve Gill, live in Brockton, Massachusetts, where Keith grew up.
During high school, Keith was a long-distance runner. He later attended Stonehill College, not far from home, where he majored in accounting. During his time in school, his long-distance running performance ranked nationwide. He once set an outstanding time of running 1 mile in 4 minutes, but an Achilles tendon injury forced him to retire.
Keith had moved to New Hampshire for a few years, where he met a mentor, a programmer and investor introduced to him by his aunt. Holding the Chartered Financial Analyst qualification, he found the complexity and challenge of stock picking deeply attractive, becoming another outlet for his energy apart from running. He started working at MassMutual in 2019.
In the summer of 2019, he began accumulating GameStop shares and occasionally posted screenshots of his options positions in his E*Trade stock account on the WallStreetBets forum. A trader replied to Keith's post in September 2019, exclaiming, "Holy s---, dude, what made you put $53,000 into GameStop?"
Over the following months, he regularly shared his results under the title "GME YOLO update," with GME being GameStop's stock symbol. He saw five-figure and six-figure investment gains, and continued to share his earnings even during stock price plunges.
Keith was determined to hold onto his GameStop investment, and his steadfastness with the stock became a legend among day traders.
For his followers, his success tapped into the desire of millions of American retail investors wanting to try their hand at stock trading. Today, stock trading no longer requires any fees, and the proliferation of various apps has made it even more convenient for investors to trade through their phones. Online investment communities made up of enthusiasts have further lowered the barrier to entry for retail investors.
During the early days of the COVID-19 pandemic, many newbie investors stuck at home expressed that engaging in online discussions with other investors about stock or options trading techniques brought them comfort. In these discussions, newcomers often sought advice from those who had made money.
The content of these discussions is not always positive. A chat room set up outside of Reddit but associated with WallStreetBets was filled with explicit, racist, and homophobic long posts. Many on the platform criticized Wall Street power players, with some hoping to see financial titans suffer losses.
“I don't have anything against anyone,” Keith said. “'Roaring Kitty' is an educational investing channel where I showcase my investment philosophy.”
On January 28, 2021, outside the New York Stock Exchange, demonstrators protested the GameStop incident, targeting the online stock trading platform Robinhood for restricting retail investors from buying into soaring stocks like GME under the guise of financial requirements, causing GME's stock price to plummet by 44% that night.
Hedge Fund Margin Calls
Many on Wall Street disagreed with Keith's bullish view on GameStop and suffered significant losses. Hedge funds and other professional investors bet heavily that the stock would fall.
To short a stock, hedge funds often borrow the stock and sell it, planning to buy it back at a lower price later and pocket the difference. However, when a heavily shorted stock rises instead of falling and experiences a sharp rebound, the ones facing losses are these hedge funds. To cover their positions, the hedge funds would have to buy back the stock at a loss, which, in turn, would further fuel the stock's rise — this is known as a “short squeeze.”
Hedge funds' bearish positions attracted many retail investors expecting a short squeeze. Keith mentioned that his investment strategy did not rely entirely on a short squeeze, but he knew others might be betting on it.
So far, those professionals have underestimated the situation, and Keith and other heavy GameStop investors have emerged victorious. On the other hand, hedge funds Melvin Capital Management and Maplelane Capital, who shorted the stock, were forced to liquidate their positions, suffering heavy losses and becoming the butt of jokes among retail investors on the Reddit forum.
More retail investors have also bought GameStop, hoping that its stock price will "go to the moon" as many investors on the Reddit forum have suggested. Retail investors have also heavily bought stocks of companies like AMC Entertainment Holdings Inc., hoping to make a quick profit with a similar trend.
According to data released last week by the global media intelligence company Meltwater, there have been hundreds of thousands of posts about GameStop on Reddit, Twitter, and Facebook in the past month. According to Dow Jones Market Data, as the stock price continued to soar, GameStop has been enthusiastically embraced by investors, becoming one of the hottest bets in the U.S. market in recent days.
Now, experienced traders are also starting to factor in influential retail investor behavior like Keith's into their investment considerations.
Mark Sebastian, founder of the Chicago options trading firm Option Pit, with about 20 years of options trading experience, has developed a stock selection software that analyzes a large number of stocks to identify those with high retail investor activity. He will engage in options trading based on the momentum of these stocks, taking advantage of upward or downward trends. AMC has recently caught his attention, although he says he is not particularly interested in AMC.
"We are trying to find these stocks before they become popular," Sebastian said. He described his recent trade as a "naked put squeeze."
Keith said his life changed overnight, but he has not yet made plans for the future. He hopes his "Roaring Kitty" channel on YouTube will continue, and maybe he will buy a house. "I thought my investment in GameStop would be successful," he said, "but I never expected so many things to happen in the past week."
Keith has a dream: "I've always wanted to build an indoor running track in Brockton, or an indoor field," he said of his hometown. "Now it seems like I can really make my dream come true."
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